How Much Do I Need to Save For Retirement?

How Much Do I Need to Save For Retirement?

One of the most-asked questions is: “How much money do I need to retire?” (See What Does it Cost to Retire?) The second-most-asked question is: “How much should I be putting in my IRA, 401(k) (or C-Bucket) so I will have enough to retire.

Introducing – The Power of 10

Hypothetical illustration:

            Age 22

            Income $50,00

            Savings rate 10%

            Aggressive Growth rate 10%

            Target retirement age 62

Plugging this data in the calculator on our website: –  Calculators/Savings Accumulation, will produce the following information:       

Scenario #1:  If you invest 10% of a $50,000 income ($5,000) at a 10% aggressive growth rate for 40 years, you will have $2,212,963

Assuming a 4% distribution rate (See What Does It Cost to Retire – 25 Times Income, 4 X 8 Rule)

$2,212,963 X 4% = $88,518

Scenario #2:  Let’s take some risk off the table and take 10% of current income ($5,000) at 8% growth = $1,295,283

At a 4% distribution rate - $1,295,283 X 4% = $51,811

Please keep in mind these reports do not take into account inflation or pay raises, nor do they constitute a promise, or guarantee future results.

This report was designed to give a simple answer to a complex question: “How much do I need to save in order to retire?” 10%

For a plan that is more customized to your current situation, please reach out to our office.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.